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Trade Blocks and the Gravity Model: Evidence from Latin American Countries

  • Carrillo-Tudela, Carlos

    ()

    (University of Essex, UK)

  • A Li, Carmen

    (University of Essex, UK)

We apply the gravity model to examine the effects of the Andean Community and Mercosur on both intra-regional and intra-industrial trade in the period 1980- 1997. After accounting for size distance and competitiveness effects, the Andean Community preferential trade agreements had a significant effect on the reference products but only a marginal effect on the differentiated products, in particular capital-intensive goods. Mercosur preferential trade agreements had a significant positive effect only on the capital-intensive subcategory of the reference products.

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Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 19 (2004)
Issue (Month): ()
Pages: 667-689

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Handle: RePEc:ris:integr:0284
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  1. Jonathan Eaton & Samuel Kortum, 1997. "Technology and Bilateral Trade," NBER Working Papers 6253, National Bureau of Economic Research, Inc.
  2. Krugman, Paul & Venables, Anthony J., 1995. "Globalization and the Inequality of Nations," Working Paper Series 430, Research Institute of Industrial Economics.
  3. Anderson, Kym & Norheim, Hege, 1993. "Is World Trade Becoming More Regionalized?," Review of International Economics, Wiley Blackwell, vol. 1(2), pages 91-109, June.
  4. Simon J. Evenett & Wolfgang Keller, 2002. "On Theories Explaining the Success of the Gravity Equation," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 281-316, April.
  5. Havrylyshyn, Oli & Civan, Engin, 1985. "Intra-industry trade among developing countries," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 253-271, August.
  6. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May.
  7. Olarreaga, Marcelo & Soloaga, Isidro, 1998. "Endogenous Tariff Formation: The Case of Mercosur," CEPR Discussion Papers 1848, C.E.P.R. Discussion Papers.
  8. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
  9. Peter A. Petri, 1993. "The East Asian Trading Bloc: An Analytical History," NBER Chapters, in: Regionalism and Rivalry: Japan and the United States in Pacific Asia, pages 21-52 National Bureau of Economic Research, Inc.
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